Firelight, a cover protocol that uses staked XRP to backstop DeFi vaults against exploits, has raised $8 million in a seed round led by Gumi Cryptos Capital, with its first cover integrations scheduled to go live this month.
Onchain cover has stayed marginal relative to the capital it would protect. DefiLlama tracks $123.7 million across 27 insurance protocols against $88.3 billion in total DeFi value locked, or about 0.14%, and Nexus Mutual alone accounts for roughly 88% of that capital. Firelight’s structure separates the two: the capital backing cover is staked XRP, which does not sit inside the protocols being covered.
Maven 11, Metalayer, Joint Effects and Tribe Capital also took part in the round. Firelight has been live on Flare since December in a bootstrapping phase that takes deposits without cover attached, and holds $76 million, according to DefiLlama, up 20% over the past 30 days. That makes it the largest protocol on Flare, which has $133 million in total value locked across 39 protocols. Deposits are capped at 65 million FXRP.
“Protocol cover and capital protection remain among the biggest blockers to institutional adoption of DeFi,” Anthony DeMartino, co-founder and chief executive of Firelight, said in a statement. “Institutions need confidence that they can deploy capital onchain with credible protection against smart contract and economic risk.”
